China eyes Pacific Rim trade boost

Trump’s victory strengthens hand

CHINA heads into a summit of Asia-Pacific leaders strengthened by the victory of US President-elect Donald Trump, whose protectionism has left the region looking to Beijing for leadership on free trade.

Trump’s upset in last week’s election has created an opening for China to extend its already massive economic clout in the Pacific Rim, a region hungry for free trade deals.

The brash billionaire has vowed to scuttle US President Barack Obama’s key trade initiative in the region, the Trans-Pacific Partnership (TPP).

The near-certain death of the arduously negotiated, not-yet-ratified 12-nation agreement leaves a vacuum that China – which was excluded from TPP – is keen to fill with its own proposed deals.

Chinese President Xi Jinping is holding a strong hand as he meets Obama and other leaders from the 21-member Asia-Pacific Economic Cooperation group (Apec) this week.

“There is no doubt that if the TPP fails, it will be a huge win for China, politically and economically,” a China economist at consultancy IHS Global Insight, Brian Jackson said.

“On the political side, TPP negotiations took years and plenty of political capital in partner countries, so its failure would create a credibility gap,” he said.

“Economically . . . it will provide China with a stronger negotiating position as one major alternative source of demand.” Trump is not at the summit in Lima, Peru.

But he looms large over Apec, a free-trade club founded in 1989 that represents nearly 40% of the world’s population and nearly 60% of the global economy.

The Republican president-elect successfully tapped the anger of working-class voters who feel left behind by globalisation, vowing to protect American jobs against cheap labour in countries like China and Mexico.

That, together with his attacks on immigration and the US role as “policeman of the world” – plus Britain’s surprise “Brexit” vote – has unleashed deep uncertainty about the postwar world order.

And it leaves China, a country the US once considered a threat to free-market capitalism, as the unlikely leader of the movement for open trade.

Beijing is pushing an Apec-wide Free Trade Area of the Asia-Pacific (FTAAP) and a 16-member Regional Comprehensive Economic Partnership (RCEP), which includes India but not the United States.

A protectionist turn for the US would cause “huge adjustment difficulties for countries that have grown through trade,” expert at Harvard University, Robert Lawrence said. — AFP